*As Barkindo calls urges cooperation for oil market stability
OpeOluwani Akintayo
06 September 2018, Sweetcrude, Lagos — The Secretary-General of the Organization of the Petroleum Exporting Countries, OPEC, has said the world will attain the targeted 100 million barrels per day crude oil consumption in the fourth quarter of 2018.
The OPEC chief revealed this to reporters in Cape Town on Wednesday.
According to him, attainment of 100mb/d consumption level later in the year is sooner than projected, therefore, stabilising forces which create conditions conducive to attracting investment are essential.
Such an approach he said, is necessary given trends expected in future world oil demand.
OPEC had forecasted that in the period to 2040, the required global oil sector investment is estimated at $10.5 trillion to meet future world oil demand that is expected to surpass 111 mb/d by 2040. This represents a staggering increase of 16 mb/d.
However, with a fast-forward 100mb/d consumption level by fourth quarter 2018, it appears the group and its partners have more work to do in terms keeping the market wet with supplies.
A member of OPEC, Iran, is currently facing sanctions by the United States- meaning the country’s quota could go missing in supply if the group does not take adequate steps to protect its market share.
Already, Saudi Arabia has been increasing supplies to make up for Iran’s shortage.
However, Iran has made its stand clear by asking OPEC not to give its quota away to other members of the organization.
Stakeholders fear Iran may not be able to retain its quota in the face of the sanctions as buyers of its oil are already cutting patronage for fear of being ‘attacked’ by the United States.
The Organisation for Economic Co-operation and Development, OECD commercial stock overhang above the five-year-average has been reduced by more than 370 mb since the Declaration of Cooperation came into force, and switched to a deficit of around 41 mb in July 2018.
Going forward, Barkindo said the priority for the Declaration of Cooperation strategic partners is on ensuring stability is sustainable in nature, spreading confidence in the industry and encouraging an environment conducive to the return of investment.
“For this reason, we continue to explore means of further institutionalizing our cooperation,” he said.
The Declaration of Cooperation has had a transformational impact on the global oil industry by boosting oil prices from an all-time low of below $30 per barrel to $80 per barrel earlier in the year.
He said it often may appear that the industry is subject to “forces beyond our control” – geopolitical events, natural catastrophes, technological breakthroughs or other critical uncertainties – “we are all aware of the impact they can have,” he said.
However, Barkindo pointed out another force which he described as being “alive and well in our industry”, calling on the world to lend more cooperation to attain a stable oil market.
“This force exists in the desire of producers, consumers, and investors, ordinary women, and men throughout the world, to have sustainable stability in the oil market”.
“This force thrives in the hearts and minds of decision-makers who know that cooperation, collaboration, and team-work remain the most effective problem-solving techniques this industry or indeed any industry knows. This force underpins the “Declaration of Cooperation” and encourages other stakeholders, many of whom are in this room, to lend their support to this noble cause”.
“This force can lead us out of any darkness and into the light. It is based on the principles of transparency, fairness, equity and respect among nations. It can be encapsulated in a simple phrase: cooperation for sustainable, oil market stability”.
“I have no doubt that this force will lead our industry into a new glorious future, with the interests of consumers and producers, firmly at its heart.”